Franchising is a very popular organizational form in service-based industries such as the restaurant industry. The industry is proudly represented by giants such as McDonald's, Subway, Olive Garden, Chili's and many companies that franchise most or all of their stores. Franchising is considered to be a performance-enhancing strategy relative to owning all stores. While some studies report that more franchising is better for firm performance, some others argue that there is an optimal level where franchising leads to higher firm financial performance. There are other studies that focus on factors that influence company-level survival of franchising firms. The present study uses an alternative firm performance measure, and aims to go beyond previous arguments, by focusing on the survival of individual franchised stores within a chain.
The project aims to use corporate-level data to assess which factors lead to chain-level
continuity (survival) rates. Part of the data for this study has been provided by
FRANDATA. The data includes the 5-year period between 2016-2019. Some variables to consider as determinants of survival would be the amount of franchise fees, franchisor company experience, system size, profitability, percentage of franchised stores etc.
To achieve the purpose of the project, first-year scholars will conduct a review of past literature. This task will help determine which relationships or hypotheses will be proposed in the current study. Then, data needs will be determined to test hypothesized relationship between chain-level factors and the survival rates of franchised stores. First-year scholars will assist in collecting and coding data for approximately 70 restaurant companies. Next the coded data will be analyzed quantitively. That is, statistical analyses will be help answer research questions about what determines and results will be written up. The findings of the project will be presented at local and/or national undergraduate research conferences.
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